Losing out on pensions

I started a self-employed personal pension with Provident Life (now Winterthur) in 1988, paying in £40 a month. Now I am 57, Winterthur says I cannot draw it until age 60. For the past three years the fund has lost money so I am paying in more annually than the fund is growing. What should I do? S, Plymouth.

If you intend to retire at 60, look carefully at the fund into which your contributions are being invested. If you have lost money over the last three years, it looks like it may well be an equity fund (ie, invested in stocks and shares).

If you want to cash in your pension at 60, check with your policy, or with the company, what investment choices are available for your contributions, as this may be an opportune time to switch the money from an equity fund into cash and fixed interest investments in order to lock in any gains your fund has made and cut the risk of losses.

If you can wait until age 65, however, you may wish to leave it invested in equities for a little longer, as you are buying units in a fund each month and this will gradually iron out the fluctuations.

By picking up lots of units at cheap prices you should in the end be better off when the stock market goes up. If you choose this option you will need to look again at where your contributions are being invested in a couple of years' time so as to lock in any gains before you retire. Make a decision soon as soon as time is running out.